Fixed Income & Liquidity Reserve

Purpose

Short-dated government and bank paper sized to cover twelve months of operating costs, commitments and known obligations.

Holdings

Government bonds, bank bills and term deposits, held with an independent custodian. No credit funds, no instruments with gates or notice periods, and nothing whose liquidity depends on markets remaining calm.

Sizing

The reserve is sized against known commitments rather than against a target return. It is measured monthly against actual obligations and reviewed quarterly.

A committed capital call or a new obligation raises the required reserve before any new position is funded.

Use

The reserve funds obligations so the equity book is not used as a source of liquidity.

Trade-off

Cash and short-dated paper earn less than longer-duration assets. The office does not extend duration to close that gap.

Elsewhere in the Portfolio

Other work in the portfolio

Two further positions that illustrate how the office allocates capital across asset classes.

Real Assets

Melbourne Inner-East Office Portfolio

Four commercial properties across Camberwell, Hawthorn and Kew, anchored by long-standing professional services tenants.

Acquired 2023–2024View →

Equities

Australian Quality Equities Portfolio

A concentrated book of listed Australian businesses selected on durable earnings and balance sheet strength.

Core holding since 2023View →

Position Facts

The position at a glance

12+ months

Obligations covered

Nil

Credit funds or gates

Quarterly

Reserve review

Short

Duration held

Questions on This Position

Questions about this position

Questions asked about this position.

Why hold a reserve instead of investing the cash?

The reserve ensures no asset has to be sold to meet an obligation. An instrument that cannot be relied on in a credit freeze does not serve that purpose.

The reserve is sized against known commitments rather than against a target return.

What exactly is it held in?

Short-dated government and bank paper, held with an independent custodian. No credit funds, no instruments with gates or notice periods, and nothing whose liquidity depends on markets remaining calm.

These are the conditions in which the reserve is needed.

How often is the reserve resized?

Quarterly, and immediately whenever the family's commitments change materially. A committed capital call or a new obligation raises the required reserve before any new position is funded, not after.

Sizing follows obligations, so the reserve does not shrink in calm periods.

Positions are reviewed annually against the thesis recorded at purchase.

Discuss a Position

Ask about the reserve

Treasury and liquidity questions are among the most practical we receive. Write to the office with the context and we will respond.

Substantive enquiries are answered within two business days.
Commercial information is treated as confidential.